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Newell v. American Insurance Administrators, LLC

United States District Court, W.D. Virginia, Roanoke Division

February 16, 2016

HOLLY P. NEWELL, Plaintiff,


Hon. Glen E. Conrad Chief United States District Judge

Plaintiff Holly P. Newell filed this action under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681-1681x, against American Insurance Administrators, LLC ("AIA") and AmeriLife and Health Services of the Virginias, LLC ("AmeriLife"). The case is presently before the court on the defendants' motion to compel arbitration. For the following reasons, the court will grant the defendants' motion.


In January of 2014, Newell began soliciting applications for insurance on behalf of AmeriLife. Newell entered into an Independent Agent Agreement (the "Agreement"), which governed AmeriLife's obligations to pay commissions to Newell for the policies she sold. The Agreement also obligated Newell to repay any commissions and service fees she received for a policy or annuity contract that was canceled, reduced, or rescinded by AmeriLife or the applicant.[1] Upon the termination of the Agreement, Newell was required to pay "any negative bond account balance or other charges ... within ten (10) days of demand." Agreement ¶ 10.

The Agreement also contained an arbitration clause, which provided, in pertinent part, as follows:

If the parties to the Agreement do not voluntarily settle any dispute within sixty (60) calendar days after the initiation of a negotiation, then all claims, (with the exception of claims arising out of Paragraphs 10 or 12), arising out of or relating to this Agreement and the transactions contemplated hereunder to which the Agreement relates, including any amendment or extension thereof and also including any breach, termination, interpretation, validity or enforcement thereof, shall be resolved by arbitration in accordance with the procedures of the American Arbitration Association ("AAA"). The arbitration shall be held not later than ninety (90) days after demand for same. The arbitration shall be conducted by a panel of three arbitrators skilled in the business, legal and technical aspects of this Agreement .... The arbitrators are not empowered to award punitive damages. The arbitration award shall be final and binding upon the parties to the arbitration and judgment thereon may be entered in any court having jurisdiction .... The parties agree the arbitration shall be held in Pinellas County, Florida. Nothing herein contained shall in any way deprive either party of its right to seek a temporary restraining order, preliminary or permanent injunction or other equitable relief in a court of competent jurisdiction. If the Agency prevails in any court proceedings or arbitration against you, you agree to pay all costs reasonably expended by the Agency, including reasonable attorney's fees. Any dispute, however, that arises out of Paragraphs 10 and 12 of this Agreement shall not be submitted to arbitration.

Id. at ¶ 25.

In September of 2014, Newell and AmeriLife terminated the Agreement. Thereafter, AmeriLife claimed that Newell owed the company $4, 741.81 for her outstanding negative bond balance and advance balance for charge backs on canceled or lapsed policies. AmeriLife and/or AIA reported the outstanding debt to Vector One Operations, LLC, which operates, LLC ("Debit-Check"), and it was posted to Debit-Check's online database of commission-related debit balances. Newell subsequently disputed the database posting, which resulted in Vector One requesting that AmeriLife and/or AIA provide evidence to support its debit balance claim. After Newell submitted documents which revealed inaccuracies in the evidence produced by AmeriLife and/or AIA, Vector One and Debit-Check removed the posting from the Debit-Check database.

On June 8, 2015, Newell filed the instant action against AmeriLife and AIA. In her amended complaint, filed on September 2, 2015, Newell claims that AmeriLife and AIA violated the FCRA by providing inaccurate information to Debit-Check. She seeks to recover actual damages, punitive damages, and attorney's fees.

On October 5, 2015, AmeriLife and AIA filed the instant motion to compel arbitration of the claims asserted under the FCRA.[2] The motion has been fully briefed and was argued on January 14, 2016. It is now ripe for review.


The Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, governs the rights and responsibilities of the parties with respect to an arbitration agreement. Patten Grading & Paving, Inc. v. Skanska USA Bldg., Inc., 380 F.3d 200, 204 (4th Cir. 2004) (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)). The Supreme Court of the United States has interpreted the FAA to reflect "a liberal federal policy favoring arbitration agreements." Moses H. Cone Mem'l Hosp., 460 U.S. at 24. The FAA provides that a written arbitration agreement "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA requires a court to stay "any suit or proceeding" pending arbitration of "any issue referable to arbitration under an agreement in writing for such arbitration." 9 U.S.C. § 3.

The United States Court of Appeals for the Fourth Circuit has held that a party can compel arbitration under the FAA if it establishes four elements: (1) "the existence of a dispute between the parties"; (2) "a written agreement that includes an arbitration provision which purports to cover the dispute"; (3) "the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce"; and (4) "the failure, neglect or refusal of the defendant to arbitrate the dispute." Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002) (internal citation and quotation marks omitted). In this case, Newell contests the second element, arguing that her claims fall outside the scope of the Agreement's arbitration clause. Newell alternatively ...

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